Authors are talking about how big corporation have become too big and fat, to understand and support competitive environment. They put their faith into mavericks, individual how are independent thinkers, unorthodox by definition since orthodox thinking is group-think. Mavericks know when to swim against the current and when to let the current carry them a distance. They are critical thinkers.
Dysfunctions of corporations
Old-world Western companies are under pressure. The rise of China, the decline of innovation, the shrinking of free trade and the aging of consumers put future profit at risk. Big brands take time to die, but when they do, it feels like “overnight”.
Critical thinking is not the main approach in corporations. Thinking takes time, time is money and money worship actions, not thinking. Quality of decision-making is the main skill indicator of competitiveness.
In companies we have COOCs – corporate, overconfident, oblivious cultures.
Four behaviors can show cultural problems and potential decline (it goes for potential of divorce too): contempt, criticism, defensiveness and stonewalling. So, contempt to junior and middle management, criticism usually from top down, not admitting mistakes and corporate taboos are signs of bad corporate status.
Persons that bring most damage to corporations would fall into OOPs category (Overconfident oblivious person). You can recognize them after their e-mail communication. They may show themselves in LinkedIn communication as influencers and their followers. LinkedIn is 400 million members, where 3.999.995 sells to the five that are still employed. Another example is chronic conference hopping (CCH). Conferences are a form of social entertainment paid for by employers.
When going for a job in corporate world, be careful that jobs description are not really jobs. Job description is always sexy while committing to nothing. Corporate thinks lots of “actions” mean an effective job. Corporate strongly believes in “benchmarking”.
Competing skillfully involves integrating three elements: strategic mindset, leadership and management. Corporate’s idea of training to compete applies the osmosis process: shuffle people from assignment to assignment, from function to function, from country to country, all so those people can accumulate experience and absorb wisdom. Corporate excels in discouraging employees from competing by packing them into “open spaces”, speaking to them like a motivational poster or paying them badly.
Employees skilled in competing raise the odds of success. Luck also plays a part. Happy employees? Maybe.
Staying a maverick means entering a quiet struggle against powerful rituals and traditions.
At the receiving end of every competitive strategy are the customers. Their decision to buy or not to buy determines the success or not-success of a company’s effort.
If we look at examples of drivers of strategy. We can see that phone menus are the result of cost analysis. Phone menus are menus you hear when you call support number at some companies. Companies using automated menus save on hiring humans. The airlines’ strategies are the result of cost-benefit analysis. If you want more space, buy it.
All businesses tighten; it’s called efficiency and productivity. But you got to be aware of overtightening, cutting costs even if they can bring benefit. Cost-cutting can become a self-inflicted Corporate problem in three ways:
- Cutting costs across the board
- Cutting costs to maintain profits now can reduce our long-term competitiveness
- Tightening costs lets you compete on price, but competing on price is the most-dangerous, least-profitable way to compete.
Overtightening is profitable for Corporate until the new entrant swoop in and offer a better alternative. Customers pay your salary, so that makes them interesting by itself. If cost cutting brings some benefit to the customers also, it is smart strategy.
Corporation also like to jump into numbers. But in order to make them work and help you become more competitive, you should use them together with common sense, logic and clear thinking. In HBR article in 2012 showed that a lot of executives are “pretending to be more data-driven than they actually are” and on the other hand that companies using Big data are more successful. This (contradictory results) can be explained by The Halo Effect, explained in the book with the same name from Phil Rosenzweig. It is the effect of the depended variable (performance) on the independed variable (use of Big data).
Numbers do not speak for themselves. Data is not wisdom; it is not even analysis. It is data. The first step, at the very core of building your skill in competing is learning to ask the right questions. Big data can help you know tactical stuff. But is misses the big picture. It misses competition in a lot of cases.
Benchmarking is another tool Corporate like to use. Benchmarking is supporting approach of learning from the best, not reinventing the wheel. It is pointed towards operational improvement. The company credited with bringing benchmarking to life is Xerox.
The essence of superior strategy with superior returns (the goal of competing skillfully) is to do the same think differently or to do different things altogether! Just doing “better” for a short while isn’t enough, unless the CEO is near retirement and then the incentive is clear. There is nothing so useless as doing efficiently that which should not be done at all. Strategy is the most important element in the skill of competing. Executing the wrong strategy perfectly is like riding a stationary bike truly fast to get to where you are going earlier.
One of the most effective techniques for competitive strategy benchmarking is to drawn an activity map for your company and compare it, if possible, to the activity map of a competitor to see if there are any differences worth exploring. Primary activities are at the core of a company’s competitive strategy.
In competitive strategy, freemium thinking is the act of repeating past strategy without putting a lot of effort and thought into how the future will be different. More and more companies are becoming similar to one another. It pays fortune for copying other companies via hiring “help”. Hiring consultants can lead to implementing proven business models. But all this lack original thinking that usually requires some effort. Corporate prefers to buy freemium from the consultants, deluding itself that it’s receiving premium.
Experiments demonstrate that people seek risk only to avoid prospect of catastrophic loss and avoid risk if the face uncertain gains. This is known as prospect theory. Formulaic thinking is easier, cheaper and much less demanding than fresh, unorthodox ideas, but is it lazy. What ifs are such a powerful tool.
People prefer positive news. People dream. Corporation use this, to put themselves into dysfunction called positivismitis – according to authors. The cure is confronting reality, the cure is honesty. Size is not a critical factor in honesty. Culture and circumstances are. Managers don’t have to be nasty, but they have to be realistic. Sugarcoating it doesn’t lead to a “better work environment”; it leads to diabetes.
For Corporate, being obsessive in itself is an obsession. Corporate obsessions can vary from reorganization, to growth to use of consultants. For Corporate rituals are not painful. Lack of rituals is what hurts. 50-70% reorganizations fail. Growth is good. Obsessive growth targets are not. Large private companies are not obsessed with growth, relative to public companies. They may care more about longevity. The obsessive, repetitive reliance on outside consultants is like a Corporate eating disorder.
Executives are being paid handsomely to design, test and carry out the company’s strategy. It they farm it out to consultants; they should be kicked out or – better – be forced to pay the consultants out of their pocket.
Corporate-speak is not to be confused with license agreements where language is used to hide or obscure meaning. Corporations have hard time to be sincere and honest. Leadership is a word that Corporate likes to use a lot. Market leaders are sometimes only jockeying with others for the first position. This behavior is the result of “competitive convergence”. Companies look alike, behave alike, make similar noises and leave similar footprints. When price is all that’s left, cost becomes all that matters. Acquisitions and mergers are tools to attain economies of scale to reduce costs even more. Being innovative is another Corporate mantra. Corporate also likes sports metaphors.
Obese companies tend to be bloated with money to burn, gathered over time until the Corporate scale breaks. First companies are lean, mean and motivated. They become fat with growth. As companies consolidate, grow and prosper, they accumulate “fat” in several forms: large cash reserves, surpluses in department budgets at the end of the year or a burecratic maze of business units, product lines, partners and subsidiaries.
Failed acquisitions are the main Corporate route to metabolic disaster. Companies in U.S. now have twice as much cash, as a percentage of total assets, as they did about 30 years ago. Their pockets are bulging with 1.9 trillion USD in cash. Designing superior competitive strategies is hard. Buying other people’s competitive successes is much easier.
Corporate overpromise. Unconditional expectation is a promise. A conditional expectation depends on something else. Conditional expectations are cautious and realistic. Any good strategy involves risk. In Corporate, targets get missed all the time. Overpromising leads to loss of trust.
Your critical thinking and diplomatic interactions can produce strategic due diligence. With rise of VC capital, diligence seams to go into wrong directions and high failure rates are acceptable. Entrepreneurs assume competition doesn’t exist. VC pretends it does. VC invest in people not in product. They put their money into management team. But they work on myth. People are less important than competitive strategy. “Excellent product” is not synonymous with “excellent competitive strategy”. If you don’t have strong competitive strategy, you have long-term problems. Imitation prevents you from falling behind, but it does not help you leap ahead. Imitation is operational strategy. Strategy uses technology, technology is not strategy. Trust but verify in business means trust the people, the stereotypes and the technology, but verify the strategy.
Corporate and results
Even if everybody in Corporate know that growth eventually slows, they don’t expect it to slow today. They never recognize Today until it is Yesterday. You need to develop resilience. Thinking differently is asking what can go wrong and developing robust strategies to enable resilience.
The Economist predicts large companies may face a long-term decline because they have lost three of their most important profit-boosters: Emerging markets, financial leverage and low relative wages.
It is not enough to do things right; we must do the right things right. Agile is the new black. Agility comprises mostly quick adjustments to existing strategy on a local (tactical) level.
Strategy, leadership and career
Leadership is about motivating. Management is about organizing and controlling. Strategy is about one thing and one thing only. Making choices. Strategy is hard because:
- When you make choices, you have to sacrifice something.
- Strategy is not marketing
- Strategy is hard because competitors will do what is necessary to foil it and other high-impact third parties will determine its final outcome.
Strategy is hard, but it’s worth the effort. Execution is hard, but if the strategy is wrong, at best it is not worth the effort.
“The problem with being leader is that you’re never sure if you’re being followed or chased.”
Companies focus on their business, not competitors. They are organized around managing rather than competing. Skill of competing is also about” how does it work” thinking. When choosing where you want to develop your career, you should make an estimation based on two premises – potential for impact and level of security. When you are young, affirmation is number one, when children come in, other things become important.
Communication inside company is usually dysfunctional. The information reaching the top of the top is totally and absolutely controlled, filtered, massaged and directed by the subordinates.
Business schools teach the skill of solving problems but not the skill of competing. Competition is not a problem to be solved. Competition is a condition of being business. Practicing competing via simulations is the most effective tool that companies should employ routinely.
Executives will forever fall back on “but it’s working” reasoning, until it stops working (not today). What some people consider knowledge are actually ideas and sometimes wrong ideas.
You should pay attention and never
be too sure. There is one place where emotions should not play a role: business
decisions. That doesn’t mean one doesn’t need passion.
 Claire A. Murray in book on page 274